PARIS, May 14 (Reuters) - LVMH (LVMH.PA) is to take a
minority stake in Edun, the ecological and ethical fashion
start-up founded by Irish singer and campaigner Bono and his
wife, the world's biggest luxury group said on Thursday.

Launched in 2005, Edun aims to promote sustainable
development and fair trading by selling T-shirts and dresses in
organic cotton made in countries such as India, Peru, Uganda,
Kenya and Lesotho.

Financial details of the deal were not disclosed.

"We are proud to contribute to the operational development
of Edun and to the improvement of living standards of local
communities," LVMH Chief Executive Bernard Arnault said in a
statement.

The French group's other fashion brands include Celine,
Kenzo, Donna Karan and Louis Vuitton.

Bono, whose real name is Paul Hewson, is the lead singer of
rock band U2 and an active humanitarian campaigner, nominated
for the Nobel Peace Prize.

"With LVMH, we can step up (Edun's) development, giving
greater stability to our suppliers and the local communities
they support," Bono said in LVMH's statement.

Edun will maintain its headquarters in Dublin and a
subsidiary in New York. Mark Weber, head of Donna Karan
International, will supervise LVMH's investment for the French
luxury group.

WINE AND SPIRIT IMPROVEMENT

As he announced the Edun deal, Arnault said trading in April
was broadly in line with the level seen during the first
quarter, with a slight improvement in wines and spirits.

Asked about the group's operations overall, Arnault told
Reuters: "It is in line with the first quarter."

Jean-Jacques Guiony, LVMH Finance Director, later told
Reuters there had been a slight improvement in wines and spirits
particularly in Cognac sales, which made up about half of the
unit's sales.

But conclusions could not be drawn based on one month's
trading, he added.

Arnault added that Diageo (DGE.L), which still owns 34
percent of Moet Hennessy, was not planning to sell its stake.

"To my knowledge, our partner is not looking to sell its
stake, so the question is not on the agenda," he said.

Last month, LVMH denied it was in talks to sell control of
Moet Hennessy to Diageo, attempting to quash market rumours the
two groups were preparing a deal. Industry observers at the time
said they believed Diageo appeared more keen on fully owning
Moet Hennessy than LVMH was on selling.

Citing analysts who expect to see green shoots of recovery
next year, Arnault forecast market conditions would improve
faster in the United States than in Europe.

"The economy will have to pick up again," Arnault said.

LVMH shares, which have gained 18 percent since the
beginning of the year, closed barely changed at 57.38 euros.